Mizuno: I won’t be surprised if Google and Amazon become asset managers, but I think a lot of people in this industry will be. I take it for almost granted that they will come into this market because they have cutting-edge AI technology and they now capture all the big data of what’s happening in the market.
Question: Which will ultimately prevail, active or passive investing?
Mizuno: I’m hopeful for active managers, but they need to adjust their business model, including their cost structure. Passive investment will only remain efficient if active management continues to be the mainstream. Active managers failed to prove they’re worth investors’ faith because research shows that as an industry, they didn’t add the alpha net of fees.
Question: How can businesses cope with fee pressure from indexing and other trends?
Mizuno: Asset managers should adjust their fee structure to improve alignment with their clients, rather than simply reducing the fee level.
Question: What’s likely to cause the next global financial crisis?
Mizuno: Mishandling of the reverse QE. I think people are a bit too optimistic that central banks will be able to reverse their quantitative easings smoothly because nobody has done it before and this is going to be a big, big historical experiment.
Question: What’s the best opportunity the industry is overlooking?
Mizuno: AI and human intelligence working together. So far I haven’t heard from asset managers that they are using AI other than just replacing their analysts. That’s the whole purpose of the recent Sony Computer Science research partnership. We are trying to be ahead of the curve. When the asset-management industry starts adopting that, we just want to be there to understand what’s happening.
This article was provided by Bloomberg News.